U.S. Energy Information Administration | 2020 Levelized Costs AEO 2015 1 

### June 2015



# Levelized Cost and Levelized Avoided Cost of New

Generation Resources in the Annual Energy Outlook 2015

This paper presents average values of levelized costs for generating technologies that are brought online

in 2020 1 

### as represented in the National Energy Modeling System (NEMS) for the Annual Energy Outlook

201 5 ( AEO201 5 ) R eference case. 2 

### Both national values and the minimum and maximum values across

the 22 U.S. regions of the NEMS electricity market module are presented.

Levelized cost of electricity (LCOE) is often cited as a convenient summary measure of the overall

competiveness of different generating technologies. It represents the per

- kilowattho ur cost (in real

dollars) of building and operating a generating plant over an assumed financial life and duty cycle. Key

inputs to calculating LCOE include capital costs, fuel costs, fixed and variable operations and

maintenance (O&M) costs, financing cos ts, and an assumed utilization rate for each plant type. 3 

### The

importance of the factors varies among the technologies. For technologies such as solar and wind

generation that have no fuel costs and relatively small variable O&M costs, LCOE changes in rough

proportion to the estimated capital cost of generation capacity. For technologies with significant fuel

cost, both fuel cost and overnight cost estimates significantly affect LCOE . The availability of various

incentives, including state or federal tax cre dits, can also impact the calculation of LCOE . As with any

projection, there is uncertainty about all of these factors and their values can vary regionally and across

time as technologies evolve and fuel prices change

.

It is important to note that, while LCOE is a convenient summary measure of the overall competiveness

of different generating technologies, actual plant investment decisions are affected by the specific

technological and regional characteristics of a project, which involve numerous other fa ctors . The

projected utilization rate , which depends on the load shape and the existing resource mix in an area

where additional capacity is needed, is one such factor. The existing resource mix in a region can

directly impact the economic viability of a n ew investment through its effect on the economics

surrounding the displacement of existing resources. For example, a wind resource that would primarily

displace existing natural gas generation will usually have a different economic value than one that woul d

displace existing coal generation.

A related factor is the capacity value

, which depends on both the existing capacity mix and load

characteristics in a region

. Since load must be balanced on a continuous basis, units whose output can

be varied to foll ow demand (dispatchable technologies) generally have more value to a system than less

1 2020 is shown for all technologies except for the advanced nuclear plant type. Because of additional licensing requirements

for new, unplanned nuclear units, the AEO2015 assumes 2022 is the first year a new nuclear plant, not already under

construction, could come online and the LCOE/LACE in tables 1

- 4 represent data consistent with the 2022 online date.

2 The full report is available at http://www.eia.gov/forecasts/aeo/index.cfm

.

3 The specifi c assumptions for each of these factors are given in the Assumptions to the Annual Energy Outlook , available at

http://www.eia.gov/forecasts/aeo/assumptions/

.U.S. Energy Information Administration | 2020 Levelized Costs AEO 2015 2 

### flexible units (non

- dispatchable technologies)

, or those whose operation is tied to the availability of an

intermittent resource. The LCOE values for dispatchable and non dispatchable technologies are listed

separately in the tables , because caution should be used when comparing them to one another.

Since projected utilization rates, the existing resource mix, and capacity values can all vary dramatically

across regions whe re new generation capacity may be needed, the direct comparison of LCOE across

technologies is often problematic and can be misleading as a method to assess the economic

competitiveness of various generation alternatives. Conceptually, a better assessment of economic

competitiveness can be gained through consideration of avoided cost, a measure of what it would cost

the grid to generate the electricity that is otherwise displaced by a new generation project, as well as its

levelized cost. Avoided cost, which provides a proxy measure for the annual economic value of a

candidate project, may be summed over its financial life an d converted to a stream of equal annual

payments

. The avoided cost is divided by average annual output of the project to develop the

“levelized” avoided cost of electricity (LACE) for the project

. 4 

### The LACE value may then be compared

with the LCOE value fo r the candidate project to provide an indication of whether or not the project’s

value exceeds its cost. If multiple technologies are available to meet load, comparisons of each project’s

LACE to its LCOE may be used to determine which project provides the best net economic value.

Estimating avoided costs is more complex than estimating levelized costs because it requires

information about how the system would have operated without the option under evaluation . In this

discussion, the calculation of avoided costs is based on the marginal value of energy and capacity that

would result from adding a unit of a given technology and represents the potential revenue available to

the project owner from the sale of energy and generating capacity

. While the economic d ecisions for

capacity additions in EIA’s long

- term projections use neither LACE nor LCOE concepts , the LACE and net

value estimates presented in this report are generally more representative of the factors contributing to

the projections than looking at LC OE alone. However, both the LACE and LCOE estimates are

simplifications of modeled decisions , and may not fully capture all decision fa c tors or match modeled

results.

Policy

- related factors, such as environmental regu lations and investment or production tax credits for

specified generation sources, can also impact investment decisions. Finally, although levelized cost

calculations are generally made using an assumed set of capital and operating costs, the inherent

uncertainty abou t future fuel prices and future policies may cause plant owners or investors who

finance plants to place a value on portfolio diversification

. While EIA considers many of these factors in

its analys i s of technology choice in the electricity sector, these c oncepts are not included in LCOE or

LACE calculations

.

The LCOE values shown for each utility

- scale generation technology in Table 1 and Table 2 in this

discussion are calculated based on a 30

- year cost recovery period, using a real after tax weighted

average cost of capital (WACC) of 6.1 % 5



### . In reality, the cost recovery period and cost of capital can vary

4 Further discussion of the leveliz ed avoided cost concept and its use in assessing economic competitiveness can be found in

this article: http://www.eia.gov/renewable/workshop/gencosts/

.

5 The real WACC for plants entering ser vice in 2020 is 6.1%; nuclear plants are assumed to enter service in 2022 and have a real

WACC of 6.2%. The real WACC corresponds to a nominal after tax rate of 8.1% for both plants entering service in 2020 and

2022. An overview of the WACC assumptions a nd methodology can be found in the Electricity Market Module of the NationalU.S. Energy Information Administration | 2020 Levelized Costs AEO 2015 3 

### by technology and project type. I n the AEO201 5 reference case

, 3 percentage point s are added to the

cost of capital when evaluating investments in greenhouse gas (GHG) intensive technologies like coal

fired power and coal

- to

- liquids (CTL) plants without carbon control and sequestration (CCS). I n LCOE

terms

, the impact of the cost of capital adder is similar to that of a n emissions fee of $15 per metric ton

of carbon dioxide (CO 2 ) when investi ng in a new coal plant without CCS, which is representative of the

costs used by utilities and regulators in their resource planning

. 6 

### The adjustment should not be seen as

an increase in the actual cost of financing, but rather as representing the implicit hurdle being added to

GHG

- intensive projects to account for the possibility that they may eventually have to purchase

allowances or invest in other GHG

- emission

- reducing projects to offset their emissions. As a result, the

LCOE values for coal

- fired plant s without CCS are higher than would otherwise be expected.

The levelized capital component reflects costs calculated using tax depreciation schedules consistent

with permanent tax law, which vary by technology. Although the capital and operating componen ts do

not incorporate the production or investment tax credits available to some technologies, a subsidy

column is included in Table 1 to reflect the estimated value of these tax credits, where available

, in

2020 . In the reference case, tax credits are ass umed to expire based on current laws and regulations.

Some technologies, notably solar photovoltaic ( PV ) , are used in b oth utility

- scale generating plants and

distributed end

- use residential and commercial applications. As noted above, the LCOE (and also

subsequent LACE) calculations presented in the tables apply only to the utility

- scale use of those

technologies

.

In Table 1 and Table 2 , the LCOE for each technology is evaluated based on the capacity factor indicated,

which generally corresponds to the high end of its likely utilization range . Simple combustion turbines

(convent ional or advanced technology) that are typically used for peak load duty cycles are evaluated at

a 30 % capacity factor. The duty cycle for intermittent renewable resources

, wind and solar

, is not

operator controlled, but dependent on the weather or solar c ycle (that is, sunrise/sunset) and so will not

necessarily correspond to operator dispatched duty cycles. As a result, their LCOE values are not directly

comparable to those for other technologies (even where the average annual capacity factor may be

simil ar) and therefore are shown in separate sections within each of the table s . The capacity factor s

shown for solar, wind, and hydroelectric resources in Table 1 are simple averages of the capacity factor

for the marginal site in each region. These capacity f actors can vary significantly by region and can

represent resources that may or may not get built in EIA capacity projections. Projected capacity factors

for these resources in the AEO 2015 or other EIA analyses will not necessarily correspond to these lev els

.

As mentioned above, the LCOE values shown in Table 1 are national averages. However, as shown in

Table 2

, there is significant regional variation in LCOE values based on local labor markets and the cost

and availability of fuel or energy resourc es such as windy sites . For example, LCOE for incremental wind

capacity coming online in 2020 range s from $ 65.6 /MWh in the region with the best available resources

i n 20 20 to $ 81.6 /MWh in regions where LCOE values are highest due to lower quality wind resources

Energy Modeling System: Model Documentation . This report can be found at

http://www.eia.gov/forecasts/aeo/nems/documentation/electricity/pdf/m068%282014%29.pdf

.

6 Morgan Stanley, “Leading Wall Street Banks Establish The Carbon Principles” (Press Release, February 4, 2008),

www.morganstanley.com/about/press/articles/6017.html

.U.S. Energy Information Administration | 2020 Levelized Costs AEO 2015 4 

### and/or higher capital costs for the best sites that can accommodate additional wind capacity . Costs

shown for wind may include additional costs associated with transmission upgrades needed to access

remote resources, as well as other factors that markets may or may not internalize into the market price

for wind power.

As previously indicated, LACE provides an estimate of the cost of generation and capacity resou rces

displaced by a marginal unit of new capacity of a particular type, thus providing an estimate of the value

of building such new capacity. This is especially important to consider for intermittent resources, such as

wind or solar, that have substantial ly different duty cycles than the baseload, intermediate and peaking

duty cycles of conventional generators. Table 3 provides the range of LACE estimates for differen t

capacity types. The LACE estimates in this table have been calculated assuming the same maximum

capacity factor as in the LCOE. A subset of the full list of technologies in Table 1 is shown because the

LACE value for similar technologies with the same capacity factor would have the same value (for

example, conventional and advanced combined cycle plants will have the sa me avoided cost of

electricity ). Values are not shown for combustion turbines, because turbines are more often built for

their capacity value to meet a reserve margin rather than to meet generation requirements and avoid

energy costs

.

When the LACE of a particular technology exceeds its LCOE at a given time and place, that technology

would generally be economically attractive to build. While the build decisions in the real world

, and as

modeled in the AEO

, are somewhat more complex than a simple LACE to L COE comparison, including

such factors as policy and non

- economic drivers, the net economic value (LACE minus LCOE , including

subsidy, for a given technology

, region and year ) shown in Table 4 provides a reasonable point of

comparison of first

- order economic competitiveness among a wider variety of technologies than is

possible using either the LCOE or LACE tables individually. In Table 4 , a negative difference indicates that

the cost of the marginal new unit of capacity exceeds its value to the system, as measured by LACE; a

positive difference indicates that the marginal new unit brings in value in excess of its cost by displacing

more expensive generation and capacity options. The range of differences columns represent the

variation in the calculation of the difference for each region . For example, in the region where the

advanced combined cycle appears most economic in 2020

, the LCOE is $ 74.6 /MWh and the LACE is

$ 75.8 /MWh, resulting in a net difference of $ 1.2 /MWh. T 

### his range of differences is not based on the

difference between the m inimum values shown in Table 2 and Table 3

, but represents the lower and

upper bound resulting from the LACE minus LCOE calculations for each of the 22 regions

.

The average net differences shown in Table 4 are for plants coming online in 2020 , consistent with

Tables 1

- 3, as well as for plants that could come online in 2040, to show how the relative

competitiveness changes over the projection period. Additional tables showing the LCOE cost

components and regi onal variation in LCOE and LACE for 2040 can be found in the Appendix. In 2020

, the average net differences are negative for all technologies except geothermal, reflecting the fact that

on average, new capacity is not needed in 2020 . However, the upper val ue for the advanced combined

cycle technolog y is above zero , indicating competiveness in a particular region. Geothermal cost data is

site

- specific, and the relatively large positive value for that technology results because there may be

individual sites that are very cost competitive, leading to new builds, but there is a limited amount of

capacity available at that cost. By 2040, the LCOE values for most technologies are lower, typicallyU.S. Energy Information Administration | 2020 Levelized Costs AEO 2015 5 

### reflecting declining capital costs over time

. All technologies rec eive cost reductions from learning over

time, with newer, advanced technologies receiving larger cost reductions, while conventional

technologies will see smaller learning effects. Capital costs are also adjusted over time based on

commodity prices, throug h a factor based on the metals and metal products index, which declines in

real terms over the projection. However, the LCOE for natural gas

- fired technologies rises over time,

because rising fuel costs more than offset any decline in capital costs. The LA CE values for all

technologies increase by 2040 relative to 2020 , reflecting higher energy costs and a greater value for

new capacity. As a result, the difference between LACE and LCOE for almost all technologies get s closer

to a net positive value in 2040 , and there are several technologies (advanced combined cycle, wind,

solar PV, and geothermal) that have regions with positive net differences.U.S. Energy Information Administration | 2020 Levelized Costs AEO 2015 6 

### Table 1 . Estimated levelized cost of e lectricity (LCOE) for new generation r esources, 20 20

Plant Type Capacity

Factor

(%) U.S. Average Levelized Costs (2013 $/ MWh ) for Plants Entering Service in 2020 1

Levelized

Capital

Cost Fixed

O&M Variable

O&M

(including

fuel) Transmission

Investment Total

System

LCOE Subsidy 2 Total

LCOE

including

Subsidy

Dispatchable Technologies

Conventional Coal 85 60.4 4.2 29.4 1.2 95.1

Advanced Coal 85 76.9 6.9 30.7 1.2 115.7

Advanced Coal with CCS 85 97.3 9.8 36.1 1.2 144.4

Natural Gas

- fired

Conventional Combined Cycle 87 14.4 1.7 57.8 1.2 75.2

Advanced Combined Cycle 87 15.9 2.0 53.6 1.2 72.6

Advanced CC with CCS 87 30.1 4.2 64.7 1.2 100.2

Conventional Combustion

Turbine 30 40.7 2.8 94.6 3.5 141.5

Advanced Combustion Turbine 30 27.8 2.7 79.6 3.5 113.5

Advanced Nuclear 90 70.1 11.8 12.2 1.1 95.2

Geothermal 92 34.1 12.3 0.0 1.4 47.8

- 3.4 44.4

Biomass 83 47.1 14.5 37.6 1.2 100.5

Non

- Dispatchable

Technologies

Wind 36 57.7 12.8 0.0 3.1 73.6

Wind

– Offshore 38 168.6 22.5 0.0 5.8 196.9

Solar PV 3 25 109.8 11.4 0.0 4.1 125.3

- 11.0 114.3

Solar Thermal 20 191.6 42.1 0.0 6.0 239.7

- 19.2 220.6

Hydro electric 4 54 70.7 3.9 7.0 2.0 83.5

1 Costs for the advanced nuclear technology reflect an online date of 2022.

2 The subsidy component is based on targeted tax credits such as the production or investment tax credit available for some

technologies. It only reflects subsidies available in 2020, which include a permanent 10% investment tax credit for geotherma l

and solar technolog ies. EIA models tax credit expiration as follows: new solar thermal and PV plants are eligible to receive a

30% investment tax credit on capital expenditures if placed in service before the end of 2016, and 10% thereafter. New wind,

geothermal, biomass, h ydroelectric, and landfill gas plants are eligible to receive either: (1) a $23.0/MWh ($11.0/MWh for

technologies other than wind, geothermal and closed

- loop biomass) inflation

- adjusted production tax credit over the plant’s

first ten years of service or ( 2) a 30% investment tax credit, if they are under construction before the end of 2013. Up to 6 GW

of new nuclear plants are eligible to receive an $18/MWh production tax credit if in service by 2020; nuclear plants shown in

this table have an in

- service d ate of 2022.

3 Costs are expressed in terms of net AC power available to the grid for the installed capacity.

4 As modeled, hydro electric is assumed to have seasonal storage so that it can be dispatched within a season, but overall

operation is limited by r esources available by site and season.

Source: U.S. Energy Information Administration, Annual Energy Outlook 2015

, April 2015 , DOE/EIA

- 0383(201 5 )

.U.S. Energy Information Administration | 2020 Levelized Costs AEO 2015 7 

### Table 2 . Regional variation in levelized cost of e lectricity (LCOE) for new generation r esources, 20 20 1

Plant Type Range for Total System LCOE

(2013 $/ MW h) Range for Total LCOE with Subsidies 2

(2013 $/ MW h)

Minimum Average Maximum Minimum Average Maximum

Dispatchable Technologies

Conventional Coal 87.1 95.1 119.0

Advanced Coal 106.1 115.7 136.1

Advanced Coal with CCS 132.9 144.4 160.4

Natural Gas

- fired

Conventional Combined Cycle 70.4 75.2 85.5

Advanced Combined Cycle 68.6 72.6 81.7

Advanced CC with CCS 93.3 100.2 110.8

Conventional Combustion

Turbine 107.3 141.5 156.4

Advanced Combustion Turbine 94.6 113.5 126.8

Advanced Nuclear 91.8 95.2 101.0

Geothermal 43.8 47.8 52.1 41.0 44.4 48.0

Biomass 90.0 100.5 117.4

Non

- Dispatchable Technologies

Wind 65.6 73.6 81.6

Wind

– Offshore 169.5 196.9 269.8

Solar PV 3 97.8 125.3 193.3 89.3 114.3 175.8

Solar Thermal 174.4 239.7 382.5 160.4 220.6 351.7

Hydro electric 4 69.3 83.5 107.2

1 Costs for the advanced nuclear technology reflect an online date of 2022.

2 Levelized cost with subsidies r eflects subsidies available in 20 20 , which include a permanent 10% investment tax credit for

geothermal and solar technologies.

3 Costs are expressed in terms of net AC power available to the grid for the installed capacity.

4 As modeled, hydro electric is assumed to have seasonal storage so that it can be dispatched within a season, but overall

operation is limited by resources available by site and season.

Note: Th e levelized costs for non

- dispatchable technologies are calculated based on the capacity factor for the marginal site

modeled in each region, which can vary significantly by region. The capacity factor ranges for these technologies are as foll ows:

Wind

– 3 1 % to 4 0 %, Wind Offshore

– 33% to 42%, Solar PV

- 22% to 32%, Solar Thermal

– 11% to 26%, and Hydro electric

– 3 5 %

to 65%. The levelized costs are also affected by regional variations in construction labor rates and capital costs as well as

resource availabi lity.

Source: U.S. Energy Information Administration, Annual Energy Outlook 2015

, April 2015 , DOE/EIA

- 0383(201 5 )

.U.S. Energy Information Administration | 2020 Levelized Costs AEO 2015 8 

### Table 3 : Regional variation in levelized avoided costs of e lectricity (LACE) for new generation

r esources, 20 20 1

P lant Type Range for LACE (2013$/ MW h)

Minimum Average Maximum

Dispatchable Technologies

Coal without CCS 65.9 70.9 80.8

IGCC with CCS 2 65.9 71.0 80.8

Natural Gas

- fired Combined Cycle 65.8 71.4 80.7

Advanced Nuclear 68.4 72.1 82.0

Geothermal 70.7 70.9 71.0

Biomass 66.0 71.7 80.9

Non

- Dispatchable Technologies

Wind 60.6 64.6 69.0

Wind

– Offshore 64.6 71.5 78.1

Solar PV 61.6 80.4 92.3

Solar Thermal 59.4 83.0 89.4

Hydro electric 64.8 69.5 80.0

1 Costs for the advanced nuclear technology reflect an online date of 2022.

2 Coal without CCS cannot be built in California, therefore the average LACE for coal

technologies without CCS is computed over fewer regions than the LACE for IGCC with CCS.

Otherwise, the LACE for any given region is the same across coal technologies , with or without CCS

.U.S. Energy Information Administration | 2020 Levelized Costs AEO 2015 9 

### Table 4 : Difference between levelized avoided costs of e lectricity (LACE) and levelized costs of

e lectricity (LCOE)

, 2020 1 

### and 2040

Plant Type Comparison of LCOE and LACE (2013 $/ MW h)

Average

LCOE Average

LACE Average

Difference Range of Differences

Minimum of

Range Maximum of

Range

2020

Dispatchable Technologies

Conventional Coal 95.1 70.9

- 24.1

- 43.0

- 15.5

Advanced Coal 115.7 70.9

- 44.7

- 60.0

- 34.6

Advanced Coal with CCS 144.4 71.0

- 73.4

- 88.9

- 61.4

Natural Gas

- fired

Conventional Combined Cycle 75.2 71.4

- 3.8

- 10.8

- 1.8

Advanced Combined Cycle 72.6 71.4

- 1.2

- 7.6 1.2

Advanced CC with CCS 100.2 71.4

- 28.8

- 35.9

- 22.5

Advanced Nuclear 95.2 72.1

- 23.2

- 31.4

- 10.6

Geothermal 44.4 70.9 26.5 22.7 30.0

Biomass 100.5 71.7

- 28.8

- 44.4

- 16.9

Non

- Dispatchable Technologies

Wind 73.6 64.6

- 9.0

- 19.6 0.1

Wind

– Offshore 196.9 71.5

- 125.5

- 191.6

- 98.3

Solar PV 114.3 80.4

- 33.9

- 83.5

- 10.5

Solar Thermal 220.6 83.0

- 137.5

- 266.0

- 74.3

Hydro electric 83.5 69.5

- 14.0

- 33.9

- 1.4

2040

Dispatchable Technologies

Conventional Coal 91.7 78.9

- 12.8

- 34.6

- 3.5

Advanced Coal 105.5 78.9

- 26.6

- 43.3

- 17.1

Advanced Coal with CCS 127.6 79.2

- 48.4

- 58.9

- 38.7

Natural Gas

- fired

Conventional Combined Cycle 82.6 79.3

- 3.3

- 9.9

- 1.2

Advanced Combined Cycle 79.3 79.3

- 0.1

- 5.6 2.1

Advanced CC with CCS 106.3 79.3

- 27.0

- 32.8

- 21.9

Advanced Nuclear 88.9 78.7

- 10.3

- 19.3

- 0.2

Geothermal 56.9 80.6 23.7

- 2.8 50.2

Biomass 93.5 79.6

- 13.9

- 34.0

- 1.6

Non

- Dispatchable Technologies

Wind 75.1 71.7

- 3.4

- 47.9 8.6

Wind

– Offshore 175.6 79.3

- 96.3

- 155.6

- 69.9

Solar PV 107.1 91.0

- 16.1

- 70.1 3.0

Solar Thermal 197.1 95.6

- 101.5

- 210.9

- 49.1

Hydro electric 89.9 77.7

- 12.2

- 30.4

- 0.5

1 Costs for the advanced nuclear technology reflect an online date of 2022.U.S. Energy Information Administration | 2020 Levelized Costs AEO 2015 10 

### Appendix: Tables for 2040

Table A 5 . Estimated levelized cost of e lectricity (LCOE) for new generation r esources, 20 40

Pl ant Type Capacity

Factor

(%) U.S. Average Levelized Costs (2013 $/ MWh ) for Plants Entering Service in 2020 1

Levelized

Capital

Cost Fixed

O&M Variable

O&M

(including

fuel) Transmission

Investment Total

System

LCOE Subsidy 2 Total

LCOE

including

Subsidy

Dispatchable Technologies

Conventional Coal 85 56.8 4.2 29.5 1.1 91.7

Advanced Coal 85 69.1 6.9 28.4 1.1 105.5

Advanced Coal with CCS 85 84.9 9.8 31.8 1.2 127.6

Natural Gas

- fired

Conventional Combined Cycle 87 13.7 1.7 66.0 1.2 82.6

Advanced Combined Cycle 87 14.3 2.0 61.9 1.2 79.3

Advanced CC with CCS 87 25.8 4.2 75.2 1.2 106.3

Conventional Combustion

Turbine 30 38.4 2.8 110.3 3.4 154.9

Advanced Combustion Turbine 30 24.1 2.7 88.4 3.4 118.6

Advanced Nuclear 90 62.5 11.8 13.5 1.1 88.9

Geothermal 94 38.2 21.2 0.0 1.4 60.8

- 3.8 56.9

Biomass 83 43.0 14.5 34.8 1.2 93.5

Non

- Dispatchable

Technologies

Wind 35 58.9 13.0 0.0 3.1 75.1

Wind

– Offshore 38 147.4 22.5 0.0 5.7 175.6

Solar PV 3 25 101.8 11.4 0.0 4.1 117.3

- 10.2 107.1

Solar Thermal 20 165.6 42.1 0.0 5.9 213.6

- 16.6 197.1

Hydro electric 4 52 76.1 4.4 7.3 2.0 89.9

1 The subsidy component is based on targeted tax credits such as the production or investment tax credit available for some

technologies. It only reflects subsidies available in 2020, which include a permanent 10% investment tax credit for geotherma l

and solar technologies. EIA models tax credit expiration as follows : new solar thermal and PV plants are eligible to receive a

30% investment tax credit on capital expenditures if placed in service before the end of 2016, and 10% thereafter. New wind,

geothermal, biomass, hydroelectric, and landfill gas plants are eligib le to receive either: (1) a $23.0/MWh ($11.0/MWh for

technologies other than wind, geothermal and closed

- loop biomass) inflation

- adjusted production tax credit over the plant’s

first ten years of service or (2) a 30% investment tax credit, if they are unde r construction before the end of 2013. Up to 6 GW

of new nuclear plants are eligible to receive an $18/MWh production tax credit if in service by 2020; nuclear plants shown in

this table have an in

- service date of 2022.

2 Costs are expressed in terms of n et AC power available to the grid for the installed capacity.

3 As modeled, hydro electric is assumed to have seasonal storage so that it can be dispatched within a season, but overall

operation is limited by resources available by site and season.

Source: U.S. Energy Information Administration, Annual Energy Outlook 2015

, April 2015 , DOE/EIA

- 0383(201 5 ).U.S. Energy Information Administration | 2020 Levelized Costs AEO 2015 11 

### Table A 6 . Regional variation in levelized cost of e lectricity (LCOE) for new generation r esources, 2040

Plant Type Range for Total System LCOE

(2013 $/ MW h) Range for Total LCOE with Subsidies 1

(2013 $/ MW h)

Minimum Average Maximum Minimum Average Maximum

Dispatchable Technologies

Conventional Coal 83.2 91.7 114.8

Advanced Coal 96.4 105.5 123.6

Advanced Coal with CCS 117.1 127.6 141.6

Natural Gas

- fired

Conventional Combined Cycle 76.8 82.6 93.2

Advanced Combined Cycle 74.0 79.3 88.4

Advanced CC with CCS 97.5 106.3 117.5

Conventional Combustion Turbine 143.0 154.9 168.5

Advanced Combustion Turbine 111.1 118.6 129.8

Advanced Nuclear 85.9 88.9 94.1

Geothermal 36.6 60.8 85.0 34.4 56.9 79.4

Biomass 82.9 93.5 116.2

Non

- Dispatchable Technologies

Wind 61.1 75.1 122.8

Wind

– Offshore 151.1 175.6 239.5

Solar PV 2 91.5 117.3 180.5 83.7 107.1 164.2

Solar Thermal 155.4 213.6 340.6 143.3 197.1 314.0

Hydro electric 3 78.0 89.9 107.7

1 Levelized cost with subsidies reflects subsidies available in 2040 , which include s a permanent 10% investment tax credit for

geothermal and solar technologies, based on the Energy Policy Act of 1992

.

2 Costs are expressed in terms of net AC power available to the grid for the installed capacity.

3 As modeled, hydro electric is assumed to have seasonal storage so that it can be dispatched within a season, but overall

operation is limited by resources available by site and season.

Note: The levelized costs for non

- dispatchable technologies are calculated based on the capacity factor for the marginal site

modeled in each region, which can vary significantly by region. The capacity factor ranges for these technologies are as foll ows:

Wind

– 3 2 % to 4 1 %, Wind Offsho re

– 33% to 42%, Solar PV

- 22% to 32%, Solar Thermal

– 11% to 26%, and Hydroelectric

– 3 5 %

to 65%. The levelized costs are also affected by regional variations in construction labor rates and capital costs as well as

resource availability.

Source: U.S. En ergy Information Administration, Annual Energy Outlook 2015

, April 2015 , DOE/EIA

- 0383(201 5 )

.U.S. Energy Information Administration | 2020 Levelized Costs AEO 2015 12 

### Table A 7 : Regional variation in levelized avoided costs of e lectricity (LACE) for new generation

r esources, 2040

P lant Type Range for Levelized Avoided Costs

(2013$/ MW h)

Minimum Average Maximum

Dispatchable Technologies

Coal without CCS 72.8 78.9 86.4

IGCC with CCS 1 72.8 79.2 86.4

Natural Gas

- fired Combined Cycle 72.6 79.3 86.3

Advanced Nuclear 72.4 78.7 86.4

Geothermal 76.7 80.6 84.6

Biomass 72.9 79.6 86.4

Non

- Dispatchable Technologies

Wind 66.5 71.7 77.2

Wind

– Offshore 71.1 79.3 85.2

Solar PV 70.4 91.0 99.4

Solar Thermal 66.3 95.6 114.7

Hydro electric 71.5 77.7 85.5

1 Coal without CCS cannot be built in California, therefore the average LACE for coal

technologies without CCS is computed over fewer regions than the LACE for IGCC with CCS.

Otherwise, the LACE for any given region is the same across coal technologies , w ith or without CCS

.